Month: March 2020

Underinsured motorist coverage is an addition to your auto insurance policy. It protects you if you’re in an accident involving someone who doesn’t have sufficient insurance of their own. In an accident, the insurance of the at-fault person is supposed to compensate the other injured person. If the at-fault party’s policy has a limit below the cost of the damages, the injured party’s underinsured motorist coverage would cover the rest.1 2

A liquidation preference is a clause in a contract that dictates the payout order in case of a corporate liquidation. Typically, the company’s investors or preferred stockholders get their money back first, ahead of other kinds of stockholders or debtholders, in the event that the company must be liquidated. Liquidation preferences are frequently used in venture capital contracts to clarify what investors get paid and in which order in a liquidation event, such as the sale of the company.

Underinsured motorist coverage is an addition to your auto insurance policy. It protects you if you’re in an accident involving someone who doesn’t have sufficient insurance of their own. In an accident, the insurance of the at-fault person is supposed to compensate the other injured person. If the at-fault party’s policy has a limit below the cost of the damages, the injured party’s underinsured motorist coverage would cover the rest.1 2

A liquidation preference is a clause in a contract that dictates the payout order in case of a corporate liquidation. Typically, the company’s investors or preferred stockholders get their money back first, ahead of other kinds of stockholders or debtholders, in the event that the company must be liquidated. Liquidation preferences are frequently used in venture capital contracts to clarify what investors get paid and in which order in a liquidation event, such as the sale of the company.

An obligation in finance is the responsibility to meet the terms of a contract. If an obligation is not met, the legal system often provides recourse for the injured party.

Unsystematic risk is unique to a specific company or industry. Also known as “nonsystematic risk,” specific risk, diversifiable risk or residual risk, in the context of an investment portfolio, unsystematic risk can be reduced through diversification.

The Emergency Banking Act of 1933 was a bill passed in the midst of the Great Depression that took steps to stabilize and restore confidence in the U.S. banking system. It came in the wake of a series of bank runs following the stock market crash of 1929.

Limited Power of Attorney (LPOA) is an authorization that permits a portfolio manager to perform specific functions on behalf of the account owner. In general, the LPOA allows the manager to execute an agreed-upon investment strategy and take care of routine related business without contacting the account holder.

AAA is the highest possible rating that may be assigned to an issuer’s bonds by any of the major credit rating agencies. AAA-rated bonds have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default. Rating agencies Standard & Poor’s (S&P) and Fitch Ratings use the letters AAA to identify bonds with the highest credit quality, while Moody’s uses the similar Aaa, to signify a bond’s top tier credit rating. read more

The unit sales number on a balance sheet represents the total sales of a product in a given period. This sales information is used to determine the price point that allows for the greatest profit per unit considering the actual cost of production.